What is the Time-Value Tradeoff that customers increasingly
face today?

We all factor time into decisions. For example, if
I were to invite you to a meeting, you might ask, "Is
it worth my time?" You would evaluate if the value
of the meeting was worth the hour you would devote to
it. Similarly, this kind of evaluation applies to purchases
that our customers make.

Although time is factored into everyday decisions,
most business executives understand relatively little
about their customers' time constraints and priorities.
Countless hours are spent developing pricing strategies,
defining customer demographics, and product functionality,
yet the impacts on time are frequently overlooked.

Why is this important to executives?

Billions are spent on developing products, services
(and even government and non-profit programs) that ultimately
fail because the offering does not provide sufficient
value for the consumer to justify the combined investment
of time and money. If a Time-Value Tradeoff evaluation
were made, such factors would be understood and measures
taken to improve the Time-Value balance and ultimate
chances for success.

What is Time-onomics?

Time-onomics is a shorthand term for Time-Value Economics.
It is a way that I describe the hidden but powerful
forces created by the scarcity of time and attention
that drive decisions in our hectic, always-connected
world.

It sounds like a Time-onomics approach applies to
more than just advertising and marketing.

Absolutely! This mindset applies to all aspects of
the company. It's a new strategic lever for C-level
executives, innovators, and marketers that can be applied
to product or service design, marketing, channels of
distribution, and customer service. Because so few companies
think this way, it also creates a new set of tools and
opportunities for executives to innovate and create
competitive advantage.

How can companies use the increasing trend of customer
distraction to their advantage?

If a customer is on your website, uses your software
tool, owns your mobile device, or is in your store that
is time that they are not spending elsewhere. Consuming
products displaces time devoted to other offerings.
Therefore the time customers are spending with you not
only increases your top line but also blocks your competitors.
This is why Facebook is so keen on games like Farmville
because it increases the opportunities to monetize the
audience by retaining them on the site longer and holding
their attention.

What's an example of a company that cleverly mastered
the Time-Value Tradeoff for competitive advantage?

Consider telephone and internet providers such as AT&T
or Comcast that offer triple-play services, such as
mobile, TV and Internet, sold together in a bundle.
A key reason that they are heavily promoting triple
play packages to customers is because the time and hassle
of switching to three services is greater than switching
just one service. Subscribers will remain with a provider
and continue to pay the monthly annuity because customers
don't want to take the time to switch. They've got other
time priorities such as family and work. This situation
creates competitive advantage for the incumbent provider.
A competitor will need to factor the time and hassle
cost into the value of the new offering, not just the
price, in order to incent the customer to switch to
a new offering.

This sounds like economic switching costs. Can you
explain?

In its purest academic form it is a switching cost.
However, when most business people apply switching costs
in practice is it economically based. For example, a
mobile contract cancelation fee would be an economic
switching cost because it involves money. What I am
describing with the Time-Value Tradeoff is Time-onomic.
Economists would argue that time is an externality,
yet the value of time today is as real as money is to
decision-making and it needs to be explicitly factored
into the customers' value equation.

What is a time magnet?

Studies have shown that increasing the amount of time
in a store or a website (a.k.a. "dwell time")
increases the amount of spending. Since the amount of
time that people spend buying is limited, this means
that if you become a time magnet where people want to
spend time, you not only increase your revenue but also
prevent your competitors from taking a share of the
limited time that people devote to buying. You also
gain the power to decide what products and services
the customer sees. This is a powerful position in the
value chain.

How does technology such as the new iPad and smartphones
figure into Time-onomics?

Technology such as the iPad and smartphones create
opportunities to lock-in customer attention via an integrated
environment. As Apple has experienced with the App Store
and iPhone, this hold enables Apple to gain a portion
of the revenue stream by owning the customers' attention
as a time magnet. The popularity of iTunes has shown
that customers will favor convenience and instant gratification
over taking time to search elsewhere for potentially
cheaper items. The provider that garners the time and
attention of the customer holds a strong competitive
position.

But this is not just limited to gaining attention.
Inattention can also play a role. Mobile apps enable
a cornucopia of opportunities to create habits. Consider
how executives are addicted to their Blackberries and
iPhones. This can be used in positive ways such as texting
health reminders to senior citizens to take their medications,
and can also be used for learning and other positive
benefits that we are just beginning to realize.

What are the different ways customers allocate their
time and attention and how can an understanding of these
help innovators and marketers?

What I have learned through my research is that not
all time is created equal. Similarly when we evaluate
different products and services we tend to prioritize
them depending on our time constraints and propensities
to spend time and attention on the offering. For example,
we devote more time and attention to a critical business
decision than selecting socks.

I've identified eight triggers that drive time and
attention allocations. Sometimes customer inattention
can be extremely effective as we saw with the triple-play
example I mentioned previously. Research studies have
found that 45% or more of human behavior is routine
and predictable. One MIT study found that routines were
so predictable that they could forecast as much as 90%
of the time where a research respondent would go next
based on a mathematical algorithm. Executives need figure
out how to insert new offerings into an existing habit
or create new ones.

How does a Time-onomics approach benefit innovators?

It provides a fresh lens for innovators to identify
market opportunities in line with today's realities.
What I have found through my research is that companies
that take a Time-onomics approach not only innovate
breakthrough offerings but they frequently create new
business models that reach new market segments and disrupt
industries.

Can you provide some examples?

Take Trip Hawkins, video gaming pioneer and one-time
founder of EA, who realized that many adults wanted
to play video games but simply didn't have the time
to play the long sagas available on the market. He founded
Digital Chocolate to offer short, quality mobile phone
games that could "Seize the Minute" and be
played during idle moments such waiting on a train platform.
By time-slicing the video-games into a new mobile footprint,
he opened up the category to previously unserved market
segments such as busy parents.

Cisco's TelePresence videoconferencing solution time-shifts
meetings from the physical sense to a virtual one ultimately
altering geographical time-zone limitations. As next
generation meeting places take hold, we can expect to
see impacts on the travel industry as business people
won't need to travel as much. The market research and
training industries will also be impacted. Imagine how
focus groups and training can now be administered using
technology like this rather flying instructors or research
teams from city to city to realize the benefits of face-to-face
meetings.

There are many other examples of breakthrough innovations
that use time to improve lifestyles, create business
to business opportunities, and address behavior change
such as mobile health regimens.

Can you elaborate how a Time-onomics mindset assists
with behavior change?

Rather than focusing just on the benefits of the offering
itself, innovators utilizing a Time-onomics mindset
to evaluate the context of competing time alternatives
and constraints and how those shape the situation. If
we can identify and address those competing factors,
we will have greater ability to gain product adoption
and behavior change. For example, rather than asking:

"What is competing for the customers' time?"
"How are time constraints shaping the situation?"
"How do we provide value to this context that is
greater than what the customer realizes today?"
Why is it significant to state your data that American
consumers aren't spending any more time today buying
goods and services than in the 1960s.

This underscores the scarcity of time and attention
in today's economy. Most executives believe that they
have 24/7 access to customers. This is simply not true.
Although customers demand 24/7 access, my research has
shown that the entire buying process for all products
and services accounts for less than 3% of time - the
world is competing for a very limited time window with
the consumer. Yet we have more technology distractions
than ever resulting in new behaviors such as media multitasking.
This calls for a fresh approach.

What does the future of the 24-Hour Customer look
like?

The platform battles between Google, Facebook and Apple
are all about locking-in the customers' time and attention
by creating time magnets. We can expect this battle
to continue as other companies realize this dynamic
and jump into owning a share of customer time. Whoever
owns the customer time and attention effectively controls
the value chain acting as a toll-taker to the customer,
and can extract the greatest power and revenue from
that relationship.

Automating and outsourcing mundane tasks in our lives
to new technologies presents opportunities because we
will be less likely to switch once these routines are
established. The Time-Value Tradeoff will factor into
these situations. Inattention and habits will be just
as powerful a Time-onomic force to business as attention.
The key is to understand how these dynamics affect your
business and harness them to your advantage.

What are the first steps readers can take to start
applying a customer time-centric approach to their business
right now?

First, evaluate where your offering fits in the context
of the customers' time and attention priorities. For
example, would purchasing your offering be a decision
like buying socks, where customers want to minimize
time? Or is it a business-critical decision in which
they will willingly devote hours?

Next, evaluate the alternatives that are competing
for the customer's time relative to your offering. How
strong or weak are these priorities? Could the customer
transition to one of these alternatives easily? or are
they engaged in a habitual routine? What is the Time-Value
Tradeoff for new customers to adopt your offering? How
much time does it take new customers to buy, set-up
and consume your offering? Are their time barriers involved?
Once you've answered these critical questions, you're
on your way to a breakthrough offering that customers
will choose over your competitors. That's time-onomics.
And that means profits.